Maryland Legal Alert for Financial Services
Maryland Legal Alert December 2009
• MARYLAND TARGETS MORTGAGE MODIFICATION SCHEMES
• HUD CONTINUES TO MOVE TOWARD RESPA CHANGES
• NEW MODEL FEDERAL PRIVACY FORM IS MADE AVAILABLE
• MORTGAGE TRANSFER DISCLOSURES UNDER TILA CLARIFIED
• WILL FHA REFORM PROPOSAL MAKE FHA-APPROVED LENDERS MORE RESPONSIBLE?
• PEOPLE HAVE BEEN CALLING ABOUT . . .
MARYLAND TARGETS MORTGAGE MODIFICATION SCHEMES
Maryland’s Office of the Commissioner of Financial Regulation continues its aggressive investigation of businesses that require up-front fees to assist distressed homeowners with mortgage modifications. As reported in The Daily Record on November 24, 2009, the Commissioner ordered at least 5 companies to cease operating their mortgage modification businesses last month and more than 100 additional companies are under investigation. The Commissioner’s actions are in concert with the Federal Trade Commission, which announced “Operation Stolen Hope,” a federal-state crackdown on mortgage foreclosure rescue and loan modification scams. Please contact Margie Corwin if you would like to discuss this subject in greater depth.
HUD CONTINUES TO MOVE TOWARD RESPA CHANGES
HUD continues to respond to the many questions that are surfacing as the January 1, 2010 implementation deadline for new Good Faith Estimates and HUD-1 Settlement Statements draws near. Click here for HUD’s most updated FAQs. HUD also announced that its enforcement of these new rules will be “restrained” through April 2010 as to those service providers (for example, lenders, brokers, and title companies) who are making a good faith effort to comply. While HUD has asked other federal and State enforcement agencies to exercise restraint, there has yet to be a similar announcement by any other agency. Can we still hope for an all-out delay? It would be a great holiday gift! Contact Margie Corwin if you would like to discuss these new RESPA rules or just commiserate.
NEW MODEL FEDERAL PRIVACY FORM IS MADE AVAILABLE
Federal banking and other regulatory agencies amended their rules and, in the December 1, 2009 Federal Register, published a final Model Privacy Form under the Gramm-Leach-Bliley Act. While the amended rules are effective at the end of this month, the “safe harbor” available to those who use the sample clauses in the currently existing privacy rules will continue for one year, until December 31, 2010. This 105-page (count ’em) final regulation will give all “financial institutions” (which is very broadly defined) yet another fun project for this coming new year. Please contact Margie Corwin or Carla Witzel when you would like to get started on this project.
MORTGAGE TRANSFER DISCLOSURES UNDER TILA CLARIFIED
As reported in our June 2009 Maryland Legal Alert, the Helping Families Save Their Homes Act imposed a new notification obligation under the Truth in Lending Act for "creditors" who purchase or take assignment of a loan secured by a consumer's principal dwelling. This new requirement became effective May 20, 2009. In the November 20, 2009 Federal Register the Federal Reserve Board published an interim final rule providing guidance on how to comply. Creditors that acquire either closed-end loans or open-end lines secured by a consumer’s home should review this interim final rule. While the rule is now effective, comments will be accepted through January 19, 2010. Please contact Margie Corwin with questions.
WILL FHA REFORM PROPOSAL MAKE FHA-APPROVED LENDERS MORE RESPONSIBLE?
Huge changes could be coming for FHA-approved mortgagees. HUD published in the November 30, 2009 Federal Register proposals regarding FHA-approval that could change the landscape for FHA lending. Some of the proposed changes include: eliminating the need for approval of loan correspondents (no more “mini-eagle”); imposing heightened responsibilities on approved mortgagees to ensure that loan correspondents comply with applicable rules; and significantly increasing (possibly up to $2.5 million) the net worth requirements for approved mortgagees. Comments are due by December 30, 2009. Please contact Margie Corwin if you would like to discuss this proposal.
PEOPLE ARE CALLING ABOUT . . .
New Regulation Z rules on advertising open-end (not home secured) credit. New Regulation Z rules on advertising open-end (not home secured) credit will be effective February 22, 2010. These rules apply to credit cards and also other open-end credit that is not secured by a home (e.g., unsecured revolving credit lines, overdraft credit accounts). New rules apply to promotional rates and introductory rates and certain information now must be in immediate proximity to special rates, while other information must appear in a prominent location closely proximate to the special rate (yes, there is a difference!). Because advertising campaigns are scheduled early, clients are now grappling with these new rules - which, at this time, are only out in proposed form. Please contact Carla Witzel if you need help.